Who Made the Money in Options Trading?
Table of Contents
The SEBI report on the equity derivatives segment (FY22-FY24) revealed that Proprietary Traders and Foreign Portfolio Investors (FPIs) walked away with the profits, mostly thanks to algorithmic trading, while Individual Traders and Others (like Corporates and NRIs) bore the brunt of losses. In short, the experts cashed in, and retail traders, particularly the younger ones, learned the hard way.
Who Made the Money and How Much?
| Trader Category | Profit / Loss (₹ crore) |
|---|---|
| Proprietary Traders | ₹32,000 crore |
| Foreign Portfolio Investors (FPIs) | ₹26,900 crore |
| Domestic Institutional Investors (DIIs) | ₹200 crore |
1) Proprietary Traders earned 96% of their profits using algorithmic trading, while FPIs bagged 97% of their gains using similar strategies.
2) DIIs? Well, they made just a modest ₹200 crore, probably by playing it safe with minimal Algo involvement.
So, Who Took the Hit?
| Trader Category | Profit / Loss (₹ crore) | Percentage Using Algo |
|---|---|---|
| Individuals | -₹13,900 crore | 13% |
| Others (Corporates, NRIs, Trusts) | -₹24,500 crore | High losses using Algo |
Individual traders and other entities took substantial losses, with individuals engaging minimally in algorithmic trading.
How Have Retail Traders Fared in F&O?
About 92% of individual traders lost money. In FY24 alone, 91.1% of individual traders lost an average of ₹1.2 lakh each.
| Year | Number of Loss-Making Traders (in lakh) | Average Loss per Person (₹) |
|---|---|---|
| FY22 | 36.1 | ₹1.30 lakh |
| FY23 | 50.0 | ₹1.43 lakh |
| FY24 | 72.9 | ₹1.20 lakh |
Despite all the risks, only 7.2% of traders made profits, and even fewer – just 1% – managed to earn more than ₹1 lakh in net profits.
Costs Are a Real Killer
While losses mount, transaction costs are another sneaky drain on traders’ funds. Between FY22-FY24, retail traders forked out over ₹50,000 crore in transaction costs.
| Type of Cost | Total Amount (₹ crore) | Percentage Share |
|---|---|---|
| Brokerage | ₹25,000 crore | 50% |
| Taxes (STT, GST, Stamp Duty) | ₹13,800 crore | 28% |
| Exchange Fees | ₹10,200 crore | 20% |
How Navia Can Save Option Traders on Brokerage Costs
Navia’s Zero Brokerage plan offers a significant advantage for options traders by eliminating brokerage costs, which typically make up a large portion of transaction expenses. With Navia’s zero brokerage policy, option traders can save a substantial amount on these fees. As we saw above, brokerage alone accounts for 50% of total transaction costs, which can add up quickly, especially for frequent traders. By using Navia Web and Mobile APP, traders can avoid these charges and focus more on effective strategies rather than worrying about high fees eating into their profits.
For example:
🔷 If a trader is spending ₹26,000 annually in brokerage fees, switching to Navia’s zero brokerage plans could save that entire amount, potentially improving overall profitability for traders who are already working with tight margins.
Age Matters: Young Traders Losing More
The younger generation, particularly traders under 30, made up 43% of F&O traders in FY24 but saw 93% of them losing money.
| Age Group | Percentage of Loss-Makers |
|---|---|
| Below 30 | 93% |
| 30-40 | 91% |
| 40-50 | 87% |
| Above 50 | 80% |
Location Isn’t Everything: Traders Everywhere Lost
It doesn’t matter if you’re trading from a metropolis or a small town—traders across states saw similar average losses. Southern states like Telangana and Andhra Pradesh stood out with higher average losses.
Location-wise Losses of F&O Traders (FY24)
| State/City | Number of Traders (in lakh) | Average Per Person Loss (₹) |
|---|---|---|
| Telangana | 2.07 | ₹1,97,000 |
| Uttar Pradesh | 9.28 | ₹1,45,000 |
| Andhra Pradesh | 2.11 | ₹1,45,000 |
| Bihar | 3.57 | ₹1,45,000 |
| Madhya Pradesh | 4.28 | ₹1,45,000 |
| West Bengal | 3.94 | ₹1,37,000 |
| Tamil Nadu | 3.04 | ₹1,37,000 |
| Punjab | 2.28 | ₹1,35,000 |
| Maharashtra | 18.78 | ₹1,35,000 |
| Karnataka | 4.02 | ₹1,35,000 |
| Gujarat | 10.09 | ₹1,24,000 |
| Haryana | 3.10 | ₹1,25,000 |
| Delhi | 3.41 | ₹1,10,000 |
| Rajasthan | 5.37 | ₹99,000 |
This table shows that Telangana leads with the highest average per person losses, followed by Uttar Pradesh, Andhra Pradesh, and other regions. Rajasthan traders experienced the lowest average losses among the listed states.
New Traders: A Painful Start
42 lakh new traders entered the F&O game for the first time in FY24. Unfortunately, 92.1% of them suffered losses, averaging around ₹46,000 per person.
| Trader Category | Average Loss (₹) | Percentage of Loss-Makers |
| New Traders | ₹46,139 | 92.1% |
| Regular Traders | ₹1,50,477 | 88.7% |
Conclusion: The Pros Are Cashing In, While Retail Is Taking the Hit
It’s clear that proprietary traders and FPIs are the ones making money in the F&O segment, thanks to the dominance of algorithmic trading. Meanwhile, retail traders, especially younger and new entrants, are bearing the brunt of losses. With high transaction costs and the complexities of the market, retail investors should approach derivatives with caution, as the data clearly suggests that it’s a challenging arena for them.
Fortunately, platforms like Navia, with its zero brokerage plans, can help traders save on costs, giving them a better chance at managing their funds efficiently in a competitive market.
To learn more about how you can be on the right side of options trading read here.
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DISCLAIMER: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Brokerage will not exceed the SEBI prescribed limit.
